


ADDRESS BY 
JOSIAH MARVEL. Eso., 


Before the Students of the Department of 
FINANCE ann ECONOMY 
of the 
UNIvERsITY OF PENNSYLVANIA, 


May 14th, 1902 


DELAWARE 
_CORPORATIONS. 


1902 


Published and Distributed by 
DELAWARE CHARTER GUARANTEE & Trust Co 


WILMINGTON, DELAWARE. 


ADVERTISEMENT. 


THE DELAWARE CHARTER, GUARANTEE 
& TRUST COMPANY acts in co-operation with mem- 
bers of the Bar and will assist them in every possible way 
in securing for their clients the corporate benefits to be 
obtained under the Delaware law. | 

It maintains a principal office in Delaware, exhibits 
the sign, takes charge of the duplicate stock ledger, and 
performs all other duties that are required to be performed 
in Delaware by corporations organized under the Dela- 
ware law and doing business elsewhere. 

It keeps its clients fully informed of changes in the 
law, opinions of courts and all other matters of interest 
regarding the Delaware statute. 

Copies of the law, blank forms, and full information 
furnished free on the request of any member of the Bar. 


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JOSIAH 


MARVEL, 
President Delaware Charter Guarantee and Trust Company. 








ADDRESS BY 


JOSIAH MARVEL, Eso., 


President of 


DELAWARE CHARTER 
GuaRANTEE & Trust Company, 
of Wilmington, Delaware, 


Before the Students of the Department of 
FINANCE AND ECONOMY 
of the 


UniIveErsiITY OF PENNSYLVANIA, 


May 14th, 1902. 


Published and Distributed by 
DELAWARE CHARTER GUARANTEE W& T Rust Co. 


WILMINGTON, DELAWARE. 
LONG DISTANCE TELEPHONE 153. 


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PUBLISHER’S ADVERTISEMENT. 


By permission of Dr. Frederick A. Cleveland, 
of the University of Pennsylvania, we publish this 
address, trusting that the same will be of general 
interest to members of the bar. The illustrations 
represent officials, having certain duties under 
the provisions of our General Corporation Law, 
arranged in the order in which their duties bring 
them into connection with a corporation incorporated 
under our statute. 

The set of forms referred to by Mr. Marvel, 
together with a copy of the General Corporation 
Law of the State of Delaware, will be furnished by 


us, upon request, free of charge. 


DELAWARE CHARTER 
GUARANTEE & TRUST COMPANY. 


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Address by 


JosAH MARVEL, Esoq., 


President of the 
Delaware Charter Guarantee & Trust Co. 


Before the Students of the Department of 


Finance and Economy of the University of 
Pennsylvania, May 14, 1902. 


Gentlemen of the University : 

I have been asked, by Dr. Cleveland, to speak 
upon the subject of ‘ Delaware Corporations, and the 
Method of Incorporating and Organizing Them” 
—special reference being had to the utilities of a 
“ Charter, or Corporation Company.” 

In approaching the subject, it must be taken 
for granted that you gentlemen are familiar, more 
or less, with the legal status of Corporations gen- 
erally, and for detailed information regarding the 
legal theories pertaining to corporations, you will be 
referred to the Department of Law of your own 
University. 


HOW BUSINESS IS CARRIED ON, 


Looking about us in the business world, we 
discover that business is carried on in one of three 
ways. 


First—By an individual. 

Second—By individuals acting together as a 
partnership. 7 | 

Third—By a Corporation. 

The first method was largely used in those 
times when the details of a single business could be 
attended to by a single individual, and similar cir- 
cumstances result in the same methods to-day. 

Later on, when the scope of business relations 
broadened and the affairs of a single concern re- 
quired a capital larger than could be furnished by a 
single person} and when the details of business grew 
to proportions too large for a single individual to 
manage, it was found convenient for two or more 
individuals to unite their brain and capital in pro- 
moting and carrying on a single business interest. 

This business method was termed a partnership, 
and the adjudication of the rights and liabilities of 
individuals doing business together in this way gave 
rise to what is known as “Partnership Law.” 

While we have no criticism to offer regarding 
the justness of partnership law as it is laid down 
in the books, yet business men, conducting their 
affairs by the means of partnership, came to look 
upon their liabilities under the law as too burdensome, 
and for relief they turned to the theories of Corpora- 
tion Law, which had long been settled but very little 
used. | 


CORPORATE ADVANTAGES. 


There are many distinctions between the duties 
6 


and liabilities of an individual as a partner and his 
duties and liabilities as a stockholder in a corpora- 
tion, and many advantages are urged in behalf of 
corporate action. These advantages, however, as 
they appeal to the business man are principally four. 


LIMITS THE LIABILITY. 


(J) Asa stockholder, his private estate is re- 
lieved from the risks and liabilities of the business 
venture. That is to say, should he be doing busi- 
ness as an individual, or in association with others 
as a partner, he is personally bound for all the lia- 
bilities which are incident to such a business, and no 
matter whether the amount is large or small, his 
whole fortune is liable for the obligations of the con- 
cern. As a stockholder in a corporation, on the 
other hand, he can invest such amount as he may 
desire in the venture and secure his certificates of 
stock therefor, and his risk is limited to the amount 
of his investment, unless a further liability is im- 
posed by the statutes of the State where the com- 
pany is incorporated. 


NO PARTNERSHIP AGENCY. 


(2) Corporate action will enable him to secure 
the aid of business associates without making him- 
self personally liable for their mistakes as partners. 
You will understand that by the “Law of Partner- 
ships” each partner is construed to be the agent of 
every other partner, and thus each one is bound by 
the errors or fraud of every other partner, While a 

7 


business man may ,be inclined to join his funds and 
ability with the funds and ability of another business 
man, he may hesitate to make himself liable as a 
partner; it, therefore, becomes expedient for him to 
secure the benefit of corporate action, to join his 
abilities and funds with the abilities and funds of 
others as stockholders, for the purpose of securing all 
the benefits arising from a partnership, and at the 
same time, to relieve himself from partnership lia- 
bilities. 


FUNDS SECURED AND CONTROL RE- 
TAINED. 


(3) It will enable him to secure funds by 
issuing stock or bonds, and at the same time retain 
control of the business affairs of the company. We 
have already referred to the General Agency of each 
partner in a partnership, but you must understand 
that in a corporation there is no agency except that 
which is specially declared by the Board of Directors. 
Thus a man who is able to retain a majority of the 
stock of a corporation, will be enabled to secure the 
election of a Board of Directors, which will declare 
such agencies as will protect his interest and con- 
form to his business judgment. 


ASSURES STABILITY. 


(4) By corporate action stability for the busi- 
ness is assured. The life of a partnership is limited 
by the life of each partner, but the life of a corpora- 
tion is limited only by the provisions of the charter 

8 





J ORNSs GALT Be Ree Lia yee JN & 


Secretary of State of Delaware, in whose office Certificates of 
Incorporation are filed. 





creating the corporation. A corporation exists en- 
tirely independent of its stockholders and is not 
affected in any way by their death, insolvency, etc. 
The owners of the stock may change by sale or by 
death, but the stock itself remains continuously the 
same, and the change of ownership affects in no way 
the continuity of the corporation. 


WHERE TO INCORPORATE. 


After considering these advantages our business 
man and his associates decide to form a corporation 
for the purpose of carrying on an established busi- 
ness, or for the purpose of establishing a new enter- 
prise. The next question which arises is, where to 
incorporate. It is a matter of regret that this ques- 
tion should need to be considered at all. There 
should be such uniformity in the corporation laws of 
the several States as would cause a man to say, 
without question, that he would incorporate under 
the laws of his native State. Yet such is very far 
from being the case. 

Each State in its sovereign capacity creates 
corporations with such restrictions and limitations as 
it may deem right and proper. It may follow the 
common law; it may add to the common law; it 
may abolish the common law. At present there 
seems to be no power which may question the 
wisdom of the action of any particular State in this 
behalf. It would seem, therefore, that before uni- 
formity can be secured, there must be either concert 
of action among the States, or an amendment to 

9 


our Federal Constitution such as will enable us to 
secure national legislation in the matter. Neither of 
these actions, however, seems to be near at hand. 
The first step in settling the question of where 
to incorporate would be to examine the statutes of 
the State where the proposed incorporators reside. 
This occasion will not allow of our giving even 
passing notice to the statutes of all the States, and if 
we had the time to give a thorough examination to 
this matter, we would discover that no State has yet 
evolved what might be looked upon as a perfect 
General Corporation Law. Each particular statute 
would show its own imperfections and shortcomings. 
We can therefore best answer the ends of this occa- 
sion by following our proposed incorporators in 
taking up the statute of the State of Delaware and 
comparing the same with the statutes of the State 
where our proposed incorporators may reside. 


DELAWARE CORPORATIONS. 


In deciding upon the advisability of incorpo- 
rating a company under the laws of a particular 
State, the investigation will mainly consist of an ex- 
amination of five things. 

(1) Powers possible. 

(2) Stockholder’s and director’s liability. 

(3) Uniformity of policy. 3 

(4) Taxation. 

(5) Initial cost. 

We will therefore take up the advisability of in- 

10 


corporating under the law of the State of Delaware 
with these ends in view. 


POWERS POSSIBLE. 


In most of the States the law does not allow 
any corporate powers to a corporation except those 
which are inserted in its charter or certificate of incor- 
poration, and no powers are allowed to be inserted 
in the charter or certificate of incorporation except 
those which are expressly given, or necessarily im- 
plied from those given, in the general law. 

In Delaware, however, we find just the reverse 
of this—any corporation may exercise any power 
which it may desire, by inserting the same in the 
certificate of incorporation, unless said power is ex- 
pressly or impliedly forbidden by the statute of the 
State of Delaware. In other words, the Delaware 
law enables three persons to legislate into existence 
—to create—any corporate powers they choose and 
confer the same upon themselves, unless there is 
something in the law forbidding the exercise of such 
powers—and very few things are, in fact, forbidden 
by the Delaware statute. Among the powers which 
may be exercised by the Delaware corporation are: 

First.—It may transact any lawful business in 
any part of the world. It may go further still and 
unite any number of lawful business transactions. 
Thus, one company may engage in mining, manu- 
facturing, transportation, either by land or by water, 
trading, dealing in the stock and bonds of other 
companies with the right of voting thereon while 

11 


owner thereof, dealing in land, etc. In Pennsyl- 
vania, Ohio and Illinois, and probably in New York, 
Indiana, Michigan, Wisconsin and Minnesota, al- 
though corporations may be formed for most of these 
purposes, not more than two of these purposes may 
be joined. 

Second.—It may have perpetual existence, as 
the statute prescribes no limit to corporate life, as is 
done in the States of Michigan, Minnesota, Indiana, 
Illinois, etc. 

Third—There is no statutory limit to the 
assets or liabilities of the corporation, although a 
limit thereto may be placed in the certificate of incor- 
poration or in the by-laws. 

Fourth.—The corporation may hold its stock- 
holder’s and director’s meetings outside of the State 
of Delaware, thus avoiding the necessity of having 
the stockholders come to Delaware once each year to 
hold the annual meeting, as is the case with New 
Jersey corporations. It may also keep its corporate 
books outside of the State, thus enabling the corpora- 
tion to transact all its business at the point where its 
business interests are situate (providing an office is 
maintained within the State of Delaware whereon 
the name of the company is printed, and within 
which office is filed a duplicate stock ledger of the 
corporation). 


STOCKHOLDERS’ AND DIRECTORS’ LIA- 
BILITIES. 


In Delaware there is no stockholders’ liability 
12 





HON. DELAWARE CLARK, 


Recorder for New Castle County, in whose office Certificates 
Incorporation are recorded. 


of 


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WLR Yeo.) \y, 





other than the common law liability for unpaid sub- 
scriptions. In New York there is an individual and 
joint liability of all stockholders to the amount of 
their stock in favor of the corporate creditors in 
case of insolvency, until all stock is fully paid. 
For example, if A has not paid up, and B has, B can 
be held by creditors for A’s delinquency. In New 
York, Pennsylvania, Indiana, Michigan and Wis- 
consin, there is a statutory individual liability for 
debts due to laborers over, or in addition to, the 
common law liability, and in Ohio and Minnesota, 
the stockholders are liable for the debts of the cor- 
poration equal to the amount of stock held by them, 
thus creating a double liability, as in the case of 
stockholders in National Banks. 

Directors in a Delaware corporation have no 
personal liability except in case of fraud, or in case 
of failure to file certain reports. The first-mentioned 
liability, of course, can attach to no honest director, 
and the second liability does not attach until after re- 
quest has been made in writing for the filing of said 
report. In New York there is an elaborate list of 
duties imposed upon directors in regard to manage- 
ment and filing reports which, if neglected, subjects 
the directors to a liability for the corporate debts in 
addition to a fine or imprisonment. In IIlinois for 
false reports they become liable for the damage 
resulting, and in New York and Minnesota they be- 
come liable for the debts of the company, and subject 
to severe penalty or imprisonment. 


13 


UNIFORMITY OF POLICY. 


The present corporation law of the State of 
Delaware has been the result of a conservative, 
steady and progressive growth. The. character of 
Delaware legislation pertaining to corporations has. 
been governed by these characteristics. 

We could notice here that the sentiment of the 
people of the State of Delaware is uniformly in favor 
of the broad and liberal provisions of the General 
Corporation Law of that State. 

This sentiment was reflected by the action of 
the memters of the General Assembly when, at the 
last two sessions of the Legislature, both the Senate 
and the House approved of the provisions of the law 
without a dissenting vote. | 

Judging the future by our observation of the 
past, it may be concluded that the corporation law 
of the State of Delaware will not be subject to any 
radical changes. The courts of the State have 
likewise, in their dealings with the rights and lia- 
bilities of corporations, maintained their well earned 
reputation for legal ability and conservatism. This. 
conservatism and regard for precedent was shown 
in the recent decision of our Court of Chancery, 
which held that when our Legislature adopted por- 
tions of the General Corporation Law of New 
Jersey, it also adopted the rulings of the New Jersey 
Courts upon these provisions, thus giving the greater 
portion of the Delaware statute as complete an ad- 
judication and as long a line of precedent and. 


14 


& 


decisions as can be claimed for these provisions 
in the New Jersey statutes. 


TAXATION. 


Professor Wilgus, whom I quote in this discus- 
sion, reports a New York banker as saying that 
his corporations were driven out of New York for 
the reason that “the State of New York has a defi- 
ciency, and its officials sit up at night to see how 
they can squeeze more money out of my corpora- 
tion.” This would seem to be the condition of some 
other States, and particularly of Pennsylvania, 
Maryland and Massachusetts. We find also that 
Ohio, Indiana, Illinois, Michigan, Wisconsin and 
Minnesota, and Maryland, impose a general property 
tax upon corporations, requiring the difficult question 
of valuation to be passed upon by various returning 
boards. 

Pennsylvania levies a tax of five mills upon 
every dollar of valuation of the corporate property, 
including capital stock, franchise, good-will, earning 
capacity, etc., and requires very elaborate reports to 
be made for the purpose of ascertaining these values. 
Delaware, on the other hand, has a very simple 
method of levying taxes upon corporations. An 
annual report is required to be filed with the Secre- 
tary of State setting forth the amount of capital 
stock paid in, and a tax of fifty cents per thousand 
is assessed thereon, this being just one-half of the 
tax assessed by New Jersey on its corporations and 
a very small proportion of the tax required in New 

15 


York, Pennsylvania, Massachusetts and other 
States. It might be observed also that there is no 
deficiency in the department of finance of the State 
of Delaware, and, in fact, an examination of the 
assets and liabilities of the State shows a very neat 
surplus. We may also notice that the revenue re- 
quired to run the State Government is comparatively 
small. All of which would indicate that any change 
in taxation would be in the direction of a reduction 
instead of an increase. 


s INITIAL COST. 


One of the principal items of expense of organ- 
izing a corporation is found to be the item of incor- 
porating fees, and to show the disparity in respect to 
statutory fees required to be paid by a company in- 
corporated with an authorized capital stock of 
$1,000,000, I cite the amount of said fee in five of 
the States, as follows: 


Pennsylvania, ait ore i orooe ae 
New Yorkya) sae ie en 50) 
West Virginia. ii.) lee 4. 0,00 
New Jersey, sshisiicie feet 200,00 
Delaware. si. ue: een 150.00 


We will not Ee any of the other States for 
the reason that we have begun with the State hav- 
ing the highest fee, and have come down to the 
State of Delaware, and have included the States in 
which most corporations are formed. There are 
other States which have a lower fee, but they are 
omitted for the reason that the general features of 

16 





HON. MARTIN B. BURRIS, 


State Treasurer of Delaware, to whom is paid taxes and fees due 
from Delaware Corporations. 





their law are so far inferior to the provisions of the 
law of the States mentioned, that a comparison 
would lead to a further discussion of details which 
are not pertinent to the subject in hand, and it is best 
that we leave this discussion to the text writers on 
Corporation Law. 


ASSISTANCE IN INCORPORATING. 


‘We may now take it for granted that our pro- 
posed incorporators have concluded to incorporate 
their company under the laws of the State of Dela- 
ware. Immediately the question will arise as to 
the agencies to be used in taking the necessary steps 
for the incorporating and organizing of the company, 
and maintaining the statutory duties within the 
State of Delaware thereafter. 

Right here I would refer to the utilities of the 
various corporation companies formed in Delaware, 
for the purpose of assisting non-residents in incor- 
porating companies under the statutes of that State, 
and performing the required duties thereaiter. 

When the General Corporation Law of Dela- 
ware was enacted, it was discovered that its benefits 
were being utilized by business men located in other 
States, many of whom had no business relations in 
Delaware, and who, therefore, were at a loss to dis- 
cover the proper agency through which to secure 
the benefits of the Delaware statute. Charter or 
corporation companies at once provided themselves 
with the necessary facilities for transacting the busi- 
ness which might be required of them, and under the 

17 


supervision of legal advice prepared, for the sake of 
convenience, printed forms and directions to be 
followed by non-resident incorporators, in order that 
every requirement of the law might be complied 
with. 

In this behalf I might say that in the prepara- 
tion of these blank forms and directions legal advice 
would necessarily be required for the reason that one 
of the principles of corporation law is that when in- 
dividuals desire to incorporate under a general 
statute they are obliged to follow, specifically, the 
requirements of the statute, and if they do not do so 
they are liable to be charged with the liabilities of a 
partnership and lose all the rights and benefits of in- 
corporation. 


HOW TO INCORPORATE. 


A set of blank forms and directions for the in- 
corporating and organizing of a company under the 
Delaware statute has been compiled by the Dela- 
ware Charter Guarantee and Trust Company of 
Wilmington. For the sake of convenience we will 
take up this set of forms and directions and consider 
the necessity and utility of each in turn. 


SUBSCRIPTION TO STOCK. 


“Form No. J,” which is called the “ Subscrip- 
tion to the capital stock prior to organization,” is used 
for the purpose of complying with the provisions of 
the law requiring that the company have subscrip- 
tions to capital stock amounting to at least $1,000.00, 

18 


and we will, therefore, have this form signed by 
Smith, Jones and Brown, our proposed incorporators, 
who will subscribe to the stock of the proposed cor- 
poration, to the total amount of $1,000.00 or more. 


THE CERTIFICATE OF INCORPORATION. 


This being completed, the next step is to 
prepare and execute “Form No. 2,” which is called 
a “ Certificate of Incorporation.” This is an impor- 
tant paper and is the basis of corporate action. It 
is the document upon which depends the corpora- 
tion’s existence and must be prepared with very great 
care. Everything which is essential to be incorpo- 
rated in a company’s charter or certificate of incor- 
poration, which is the same thing under a General 
Corporation Law, is included in this paper, and ap- 
propriate blanks have been left for the purpose of 
being filled in with those provisions, which differ 
according to the circumstances of each particular 
corporation. 

Among the matters to be filled out in this paper 
is the special object clause which sets out the com- 
pany’s particular line of business which it intends to 
promote and carry on. This clause should be very 
broad so as to cover such special circumstances as 
may arise in the future. At this point the assistance 
of a charter company, of the kind of which I have 
already spoken, is found to be of great help, because 
of the large number of companies with which it is 
connected and the forms of special object clauses 
which may be found upon its files, to suit the cir- 

19 


cumstance of almost every conceivable business 
operation. Then must be inserted the total amount 
of authorized capital stock, etc. Being completed, 
the paper is signed by Smith, Jones and Brown, who 
acknowledge the same before any person authorized 
to take acknowledgments of deeds by the law of the 
State of Delaware, and the person most used in such 
cases is a Notary Public. 


DUTY OF SECRETARY OF STATE AND 
RECORDER. 


The certificate of incorporation, being completed 
according to law, is now sent to the Secretary of 
State, together with the necessary fees. The Secre- 
tary of State files the certificate in his office, and 
makes a certified copy thereof, that is, a copy certi- 
fied to by him as being correct, which certified copy 
is then recorded in the office of the Recorder of 


Deeds. 
ORGANIZING THE COMPANY. 


The company is now incorporated and is ready 
for organization. It is a question of law as to 
whether a corporation can be organized outside of 
the State of its creation. In my opinion, every com- 
pany must be organized within the jurisdiction of the 
State creating it, for the reason that a corporation 
can do no act outside of the State of its creation until 
it has become a full fledged corporation in every re- 
spect. It is necessary, therefore, for a meeting to be 
held in Delaware for that purpose. 

20 





HON. JOHN HUNN, 


Governor of Delaware, who has certain duties relating to 
Delaware Corporations. 





FIRST MEETING. 


It is necessary that notice of this meeting be 
given to each of the incorporators, in accordance 
with the statute, or the incorporators may waive the 
statutory notice, and agree in writing that the meet- 
ing shall be held at a certain time and place. For 
the purpose of complying with the law in this re- 
spect we use “Form No. 3,” being “ Waiver of 
Notice of First Meeting of the Incorporators.” 

It may not be convenient for Smith, Jones and 
Brown to come to Delaware to hold this first meet- 
ing. Such being the case, the aforesaid incorporators 
give a power of attorney or proxy tosome person or 
persons in Wilmington, who may act in their stead 
at the first meeting and do all of those things which 
the incorporators themselves might do if they were 
present. The utility of the charter company is found 
here likewise, as it will supply the persons who will 
serve as proxies for the purpose of holding this meet- 
ing. This form of proxy is known as “Form No. 
4” of the set of forms which we have before us. 

So on the day agreed upon in the waiver of 
notice, the proxies for Smith, Jones and Brown meet 
at the time and place designated, and proceed to 
organize the corporation. The procedure usually 
followed in a corporation meeting should be well 
known to the incorporators and to the proxies, for the 
purpose of preventing informalities. 

We find in the set of forms before us “Form 
No. 7,” which indicates the usual procedure to be 
followed in holding the first meeting of the company, 

21 


and by following the directions of this form, the 
procedure becomes a very simple matter. Following 
the directions therein given, the proxies proceed to 
read and accept the charter, and have the same en- 
tered in full upon the minutes of the meeting. The 
other papers which have been filed are presented, 
accepted and directed to be entered upon the minutes. 


BY-LAWS. 


It is necessary at this meeting to prepare and 
adopt a set of By-Laws. This paper is next to the 
charter in importance, and prescribes the rules and 
regulations by which the business of the company 
is governed. 

We find in the set of forms before us a set of 
By-Laws, being ‘Form No, 6,” which has been 
prepared for the purpose of indicating to the incor- 
porators the statutory requirements in this behalf, 
with suggestions as to changing and amplifying the 
same for the purpose of having the rules conform to 
the necessities of the particular corporation. These 
By-Laws, you understand, are adopted by the incor- 
porators acting as stockholders, but provisions are 
made whereby the directors are authorized to amend 
the same at any regular meeting upon due notice. 


BOARD OF DIRECTORS. 


We now come to probably the most vital point 
in the organization of the company—the naming of 
the men who will in the future control the company, 
that is, the Board of Directors. Under the pro- 

22 


visions of the Delaware law the incorporators con- 
trol the management of the company until the 
directors are elected, but thereafter the directors 
assume control and the incorporators fall to the rear 
as stockholders only, or it may be that they will drop 
out of the company altogether, for the reason that it 
may be that they have taken the action and pro- 
cedure herein indicated in behalf of some other 
persons. It often occurs that some of our business 
men desire to incorporate a company, but do not 
desire to be known in the transaction, until they 
have had an opportunity to secure certain contracts 
or otherwise. We will assume that this has been 
the case with the corporation in hand, and that 
Smith, Jones and Brown are what are known as 
“straw men,” whose services have been secured for 
the purpose of taking the action herein indicated. 

At this point in the organization of the company 
it therefore becomes necessary for the real parties in 
interest to come in with the power of taking charge 
of the company which has been incorporated and to 
promote its interest. 


DIRECTORS MUST BE STOCKHOLDERS. 


Under a provision of the Delaware law, how- 
ever, it is necessary for each director to own at least 
three shares of stock. So before the real parties in 
interest may become elected directors, it is necessary 
for Smith, Jones and Brown to assign to them a 
sufficient amount of stock to qualify them in this 
behalf, and in “Form No. 5,” in the set of forms 

23 


before us, we find a proper form of assignment of 
stock to be made. By means of this form our in- 
corporators assign a portion of or all their subscrip- 
tions to capital stock, to the real parties in interest, 
and elect them as directors of the company. The 
incorporators now being stripped of their authority, 
which has become lodged in the Board of Directors, 
have no further business to transact, and thereupon 
the stockholders’ meeting is adjourned and the 
directors are the parties to whom we look for further 
action in behalf of our corporation. 


ORGANIZATION COMPLETE. 


These directors, as you notice, have been elected 
within the State of Delaware, and the company 
is now organized, with some one in absolute control, 
and is ready to migrate from its home State and 
transact business in any other part of the world. So 
our directors, who may live in Boston, meet after 
due notice and proceed to elect the officers of the com- 
pany, provide for contracts to be entered into, and to 
carry out the purposes and promote the objects for 
which the company has been incorporated. Here 
we must leave them. The parties in interest are no 
longer known as incorporators, but are Officers, 
Directors and Stockholders. We have followed the 
action of the incorporators from the discussion of cor- 
porate benefits to the consummation of the organiza- 
tion under the statute of the State of Delaware. The 
rights and liabilities of the parties in interest, from 
this time on, as already stated, are the rights and 
liabilities of Officers, Directors and Stockholders, and 
a discussion of these rights and liabilities will be re- 
served for another occasion. 


24 





CHAs. B. Lore, Chiet Justice. 

JoHN R. NICHOLSON, Chancellor. 
WILLIAM C. SPRUANCE, Associate Judge. IGNATIUS C, GrRuBB, Associate Judge. 
JAMES PENNEWILL, Associate Judge. WILLIAM H. Boyce, Associate Judge. 


THE SUPREME COURT OF DELAWARE. 


The court of last resort in all litigation regarding corporations in the 
State of Delaware. 


oh 


, 


" a =" at. 





ADVERTISEMENT. 


THE DELAWARE CHARTER, GUARANTEE 
& TRUST COMPANY acts in co-operation with mem- 
bers of the Bar and will assist them in every possible way 
in securing for their clients the corporate benefits to be 
obtained under the Delaware law. 

It maintains a principal office in Delaware, exhibits 
the sign, takes charge of the duplicate stock ledger, and 
performs all other duties that are required to be performed 
in Delaware by corporations organized under the Dela- 
ware law and doing business elsewhere. 

It keeps its clients fully informed of changes in the 
law, opinions of courts and all other matters of interest 
regarding the Delaware statute. 

Copies of the law, blank forms, and full information 
furnished free on the request of any member of the Bar. 


